University leadership explains guaranteed tuition approach

Mar 1, 2013From staff reports

The president, provost, and vice president for finance and administration provided an update on the guaranteed tuition approach.

Dear Colleagues,

Since September, we have engaged in discussions with Student Senate, Budget Planning Council, and the Ohio University Board of Trustees about how to promote affordability while protecting academic excellence. What we have been seeking is an effective means of managing the cost of a student’s education while generating the operating and capital funds needed to protect the quality of an Ohio University degree.

The Guaranteed Tuition Approach
Our discussions with members of the university community have generated interest in exploring the concept of a guaranteed tuition program. Such a program would allow students to pay a single tuition rate along with a specified amount for room and board for a fixed period of time—typically four years or for the specific number of credit hours needed to earn a degree.

A guaranteed tuition program has the potential to provide predictability and transparency for students and their families. It also provides an incentive to complete a degree in a timely manner and may make a difference in an institution’s ability to retain students.

Such a program also would provide greater predictability and transparency for the university. While we wish it were not so, our chief source of revenue has become tuition. In 2001, the university received 43% of its budget from state support and 48% in tuition and fees. In 2012, 27% came from the state and 68% from tuition and fees.

Our ability to maintain excellence depends on having consistent and sufficient sources of revenue. Knowing what we can expect to generate in tuition over a given number of years will allow us to plan for academic needs that are on the horizon.

Building a Model
We obtained information about the experiences of other universities, such as the University of Colorado, George Washington University, and the University of Kansas, which have implemented guaranteed tuition programs. While we were researching these programs at other institutions, John Day, Associate Provost for Academic Budget and Planning, and Chad Mitchell, University Budget Director, began to build a model for Ohio University.

In addition to affordability concerns, the current version of the model takes into consideration inflationary and economic risks, and proportional share. For reference, it is helpful to know that in the past decade, tuition and fees at public four-year universities across the nation increased an average of 5.6%. For the past five years, students studying at public institutions in the state of Ohio have experienced a 3% annual increase.

Testifying in Columbus
Ohio University’s exploration of a guaranteed tuition model caught the attention of state legislators in Columbus. On February 26th, we testified in front of the Ohio House Finance and Appropriations Subcommittee on Higher Education. A copy of the document that outlines our testimony is available here: http://www.ohio.edu/provost/.

In our testimony, we described a multi-year model that would keep tuition increases for continuing students within the 2% cap found in Ohio Governor John Kasich’s proposed biennium budget. Tuition for new students is 3% higher in our model, which aligns with increases at Ohio public universities over the past five years. The model suggests that the dual configuration of tuition rates would control costs for students, provide the university with sufficient revenue to meet fixed expenses, and allow us to make needed investments in faculty, academic programs, and infrastructure.

Our discussion with members of the subcommittee was helpful. Like us, they are trying to find ways to support quality and affordability in higher education. Testifying before the subcommittee also may assist us if we decide to pursue a guaranteed tuition program. If the Governor’s 2% tuition cap is maintained in the state budget, Ohio University would need to gain approval from the General Assembly to implement such a program.

Dealing with Student Debt
We recognize that while a guaranteed tuition model will help control student debt, we must do more. Another approach that will allow us to make headway on the issue involves financial aid. We are currently engaged in a discussion with the Board of Trustees on how the university can more effectively leverage its financial aid programs and how we can augment them through a concerted effort to raise $75 million in scholarship funding over the next seven years.

Next Steps
We plan on moving forward with the development of a guaranteed tuition model. Our goal is to bring a guaranteed tuition program to the Board of Trustees for their review at the April 19 meeting. As we refine the model, we will continue to seek input from students, faculty, and staff.

We are encouraged by the support that we have received so far and look forward to deepening our understanding of an approach that could be instrumental in keeping Ohio University affordable and exceptional.